10 murder in the second degree to a research project questioning the risk and rewards of artificial intelligence on friday january 16th 2015 and "squawk box" begins right now. >> live from new york where business never sleeps this is "squawk box." >> good morning everyone. i'm becky quick along with joe and andrew. european regulators throwing up a red tag this morning saying amazon's deals may violate eu law. but first here's other major stories. the iea is seeing signs that the oil decline tide will turn but it does caution that prices may have further to fall and a rebound is not yet imminent. china unveiling new support measures as the economy continues to show weakness. the central bank would lend

about $8 billion to banks at discounted rates. the goal is to allow the firms to relend the money to small businesses. it's been more than 24 hours since swiss central banks shocked the financial world. it abandoned it's cap on the euro an we're still learning about the fall out. regulators around the world are looking for information about what happened and how some retail brokerages entered insolvency. it says the volatility left it with a negative equity balance and it's trying to sure up it's capital. let's take a look at what's happening with the u.s. equity futures this morning. the dow was down by triple digits yesterday. the dow was indicated down by 42 points. s&p few turs down by 6 and the nasdaq down by over 28 points. of course as we've seen what happens in these early hours is no indication of what would happen by the market close. no indication of what would happen by the market open. >> so true.

>> a lot of volatility out there. >> it is. corporate news this morning, here's our early stocks that we're watching. the first one intel posting better than expected earnings and revenue. revenue guidance came in slightly light. we'll talk to the tech giant ceo at 8:40 eastern time. >> i'd like to buy a vowel. >> schlumberger is cutting 9,000 jobs. they're working on dealing with costs as it deals with oil prices. revenues fell short. the eu is outlining it's tax case against amazon today. part of an investigation launched three months ago. their tax arrangements may violate eu law and give the company an illegal advantage over competitors and what was having is they were allowed to operate throughout all of europe on almost a tax free basis.

>> you'll see the eu cracking down on more of this. they have been looking at ireland and other places thinking this may not stand. it's not what the eu is all about. >> also this morning ree gal entertainment deciding against the sale of its company. the company hired morgan stanley to look for a deal and they didn't come up with one. also pharma firm depomed is acquireing a deal. >> the futures down 41. there's been volatility and people aren't just talking about the futures markets. we heard it yesterday the usage of the term new normal to talk about all different markets. currency markets, oil markets, commodities markets, treasuries bonds, sovereign debt everything seems to be in a state of flux here and how it

plays out will definitely effect whether we have that 8 to 10% gain in the markets this year which i don't know i think that was a little too crowded. maybe it ends up like that. >> it was the first -- >> unanimous. >> the first week of january, first week wasn't great. >> didn't work that way last year. >> january may not be great. >> i started thinking about just this -- i've been on this kick for awhile but just the european union. not the euro zone. they have the euro but the european union itself. >> you have been on this kick for years now. >> i have been but so the swiss kept the franc. they tied it to the euro. most places just took the euro. so they don't even have a chance to let this happen. >> they don't have a chance to back out and watch the stock market lose $100 million. >> if everybody backed out what would happen? >> no how many different

economies over there are like switzerland. different situation and economy and you can see the stress of it using that currency. what about portugal and spain and all of these places. >> don't have the political tie in so you can't say these things are going to be uniform. >> but how do we know that by using the euro that these other currency situations aren't stressed? to keep that swiss franc with that relationship euro and look what happened. it moved 30%. how can greece and germany have the same currency. >> in this case the central bank made the decision to do what it's doing. these other countries, government has to do it and it's much more comply katd. >> covers up some inherent differences between these economies. >> huge differences. people say you have 50 states over there and you all use the dollar. it's not the same thing.

>> we have a federal government that sets federal laws. >> that apply to everyone. but anyway after it's all said and done let's sue how europe setting itself up andrew. setting itself up. there it is. >> i've had people trying to photo bomb us this morning. >> really? >> just now. >> i was just waving at them that's all. >> i don't trust people walking around at 4:00 in the morning usually. >> they have coffee cups. >> probably stole them. >> 40 ouncers back there. here's the asian markets. shanghai up the hang seng and nikkei both down. i don't know where oil is this morning. it's up a little bit. $47. really going out on a limb. it should start to stabilize a little but it could go lower or rebound or stay where it is.

but there it is at $47. check out the ten year. we're seeing things that aren't supposed to happen. the 30 year was an all time low. >> it was 2.4%. all time low. reflect what is we have seen in japan and germany and what is this indicating? with are we looking at a global deflationary environment. >> deflationary spiral. maybe there are some future risks in the global economy. there's the euro now, 115. >> howly cow. >> the swiss removed the cap and the euro goes down anyway which is weird and it went down -- really the u.s. dollar went down significantly. >> but that's because we're looking at the swiss national bank's move being something that indicates they think the ecb is going to react next week. >> and now people are saying if

the ecb doesn't act everyone already has the trades on for it to act and that could cause a mess but in acting it caused a mess yesterday so there's not a lot of good choices for the officials consider the unelected bureaucrats in brussels which is another thing that they're making these decisions. >> they are. >> what's draghi? he's italian. >> yeah. former goldman sachs man. >> mit ph.d. as well. let's look at gold which you figure sooner or later people are going to say i want something that i know is -- you can at least make jewelry out of this. 1258 now. let's get back to this. the swiss national bank's currency move is the story of the week catching the global markets off guard yesterday and imf chief christine lagarde sat

down to dismiss the idea that a currency war might be brewing but to also say she had no idea it was coming. >> there was talk about a currency war back three years ago. we are not hearing those words anymore. not that music. and i would certainly hope that we do not have currency wars and that countries and their central banks in particular refrain from competitive devaluation. >> that's her hope but you obviously can't control what the individual countries are going to do and what else could she say. looks like a currency war is right ahead of us here. >> we believe in the strong dollar. >> what they say matters about whether it's self-fulfilling so i don't know how much stock you can put in that. how has the swiss move upped the ante for the decision nec week?

let's speak with germanyjeremy. is it true that you think if they were not to act that it could foil the markets. >> well clearly the markets are royaled by the events of the ecb. if they don't step up to market expectations we would see further degrees of elevated volatility and why the investors have been seeking the safety of bonds because of the extreme volatility in the equity markets and currencies and the question is will the ecb disappoint or provide enough liquidity to keep the euro lower. >> so what are the ripple effects we have just in terms of the european union do you think? we were making the point that there's a lot of countries that didn't have the choice and

didn't keep their own currency and didn't have the choice to say this has gotten too hard. that's why we have some of the economies stuck in neutral. >> well they have been under pressure over the course of recent years but you could argue that the euro is already up from the levels and highs in early 2014 and overtime that will provide a loosening of monetary conditions but they probably need to see more and that's the reason why the euro is effectively talked down by the ecb and that's why the policy of expanding the balance sheet is aim at cheapening up the currency to boost economic conditions. of course in the context of switzerland they're not a european union member. they are a sovereign state. they did take that conscious decision to peg their currency against the euro which resolves

themselves from independent monetary policy and that's been the inherent problem. they have been holding this line particularly over recent weeks and now we have seen the consequences of that and of course the valuation loss for the swiss is fairly extreme and more than double the profit the snb managed to create last year. >> what do you think -- does germany deserve a euro that's this cheap right now in the same basic currency as greece? that's the point we're making. how can that ever work? >> well of course that comes back to the fundamental question about tying countries together within one single currency union and having different fiscal states and different political elements but having said that i think the euro will be -- germany is getting a net benefit from the cheapening up in the euro. from the peripheral nations if you look to the aggregate value of euro dollar and foreign affair value they're probably not too far away from it but if

you looked at each individual nation it would be lower than for germany. germany could with stand the euro up to 145 or 155. germany of course will be the economy of the euro zone that will get the greatest net benefit and that's continued to be the driver of growth as far as the euro zone is concerned. without that they look much sicker and that would be much more damaging for the global economy which the euro zone is still an integral part. >> it is you know we're deep in the weeds now and usually your currency won't go up 30% when you cut interest rates again too. none of it makes sense, does it? >> yes they cut interest rates. they're moving rates further negative to try to stem the rise of currency but it underlines

the fact hah the swiss are holding back the strength of the currency for a long period. back in 2011 euro-swiss got down to near a parody. we got back to more or less where we were when the peg was imposed. it's more of a realistic evaluation. it's like 10 to 12% of gdp. >> i think the fed is going to lose it's nerve here. let's say they go up in june or april. we're going up. best economy in the world and europe is going to qe. what's the fair value for the euro? 60 cents? >> i wouldn't necessarily think it's going to go that far. >> i know. >> monetary policy divergence is

coming. there might be concerns at the federal reserve. may hold back in terms of timing but i think we're going low. i don't think we'll get anything like the sort of extremes we've seen historically in terms of the euro dollar but we're heading back toward the 110, 112 era. it might be preemptive because we remember that the legacy will start to have some impact over time. >> okay. all right jeremy. just the more you think about it. we appreciate it. but the best layed plans of mice and men. all the central banks around the world are printing money. inflation's coming. >> that was perfect. >> why? i'm not going to say the exact on o sit but instead of an inflationary spiral it's a

deflationary spiral. and no one predicted that. we wouldn't go below 2? are we going to go below 1 on the ten year. >> i would say anything can happen at any moment. i've been shocked over the last 15 months where our yields have gone. we have been watching the stock market. good news is its friday. bad news is its a rough week for the bulls. stocks are riding a losing streak. joining us to talk about this is david, chief market strategist at amerprize financial. thank you for being here. i asked for a 30 year. if you look at the 30 year it's 2.4% yesterday and today it's below that at 2.37%. if you look at that yield,

germany, japan, any of these yields is telling us that bad things is happening now. is this different this time around? what do you think? >> we like to call this great and final global unwind. what we're seeing before our very eyes over the last four to six weeks is finally let's give up and come to reality that growth is not coming from em or europe. it's coming from the u.s. and that's why we had this massive rerating of commodities while people are coming to grip with europe is in trouble. em is taking out their capacity and the u.s. is the place to be. i'll be in europe next week and it will be interesting to see if european investors will be less reticent to come into the u.s. because from our perspective they have been reluctant buyers

of the market rally in the u.s. the currency issue is going to be strengthening that wonderment but in terms of the move in yields this is an overreaction on a near term basis. >> you're not going. >> i'm going to be in zurich. >> no way somebody would spring for that for you. >> right. >> but what are you doing in zurich? >> it's a great time to see clients. >> after the move yesterday. >> we're going to be in all the major cities and especially in switzerland because of where they had issues and the institutional private money ft. >> when we think of howell america is doing versus the rest of the world you may have the impulse to say go usa but it's a

global world at this point. you have to wonder when all the problems around the globe catch up with us. >> absolutely. a lot have investors as well so they have to pay attention to what's going on but to get back to your question about yields talking about the ecb probably doing quantitative easing and one of the members of the council last night was talking about how it has to be sizable in order to have an impact. it seems as though the dollar is going to get stronger and yields will go lower. two weeks into the new year and we're rethinking our expectation that yields should be going higher. >> does this put the fed on hold at this point? i can't imagine them doing anything in april and have doubts about june. >> i would guess yes. my expectation was that they would raise rates in june. just to continue the process of normalization. but if this was june right now of course they wouldn't do it. >> that was my question

yesterdayful they're still saying it's dated. we want you all to know it's data dependent. does that tell us anything? does that mean it's data dependent on u.s. data coming in that's strong or does data like zero% percent in europe does that count as data to them? >> they acted so far as if it doesn't matter to them. we're going to take data from overseas. >> they haven't raised rates. >> they focused on the inflation rate here and the jobs situation. >> but they talk about it in the room. they do look at the world mark market. >> there's a transition mechanism. >> but clearly if things are slowing internationally and ceos are seeing that and the impact on their businesses this will be all about wages. the fed is going to pull the

trigger when you start to see wage increases so corporate america will change their behavior and start spending money if things are slowing down globally. we remain in a reactive marketplace and the behavior has to change to allow corporate america to feel better about what's happening with their businesses. if things continue to slow they're not going to hire and wages aren't going to go up and the fed is going to be on hold longer than people think. >> on hold longer than people think meaning you don think it's happening this year or not in june? >> you know estimates are like everyone else. in june have to take the other side of the coin saying we think it's going to be pushed out especially how the year is beginning. we could see a behavioral change and data could say things are really decoupling. the opposite of what happened in '08 and the fed would do something. >> although some of these measures they don't have to lookout side the u.s. questioned we had ppi that dropped by 30 basis point which

is is the biggest drop we've seen in three years. that comes after a decline of of .2. >> what do we have to see for them to change their forecast? how many weeks -- does the situation have to be this dire? better or worse? i know you have your own view and the firm has a view that you can -- change the firm's view in a day but does a day change the world. >> no, i don't think. this is an unwind. things get worse toward the end. especially with having weakness coming into friday that's typically not good for markets but good for market turns so we need to see how businesses react to what global growth is saying. >> fun fact so we know what the eu is right?

there's 28 countries in the eu the ones that you think of the u.k. and portugal and all of those but the european economic area the eea, includes all the eu countries but also iceland and norway and it allows those people to be part of the eu single market. >> right. >> switzerland is neither a part of the eu or a part of the eea but it is able to be part of the eu's single market. >> it's a trading partner. >> but it's so jury rigged over there. the way they have this put together. and the euro zone is different than the eu. half these countries they still have their own poll. >> was it pegged. >> i don't think so but i didn't know that the swiss franc was pegged until yesterday. they've been doing it since

2011. >> a couple still has the kroner and one of them doesn't. and they're over there wondering why we vn grown any here. i wonder why? we have a good system here. everyone should adopt the dollar and actually let -- >> and link our economy to every other economy. >> no. >> they're maying music. >> i feel bad. >> thank you for coming in. >> when we come back joe is going to continue the education for all of us -- i'm learning. i'm learning. also david winters is now firing back at barry diller at comments he made and a coke board member. he did it on squawk box yesterday. a war of words. we'll bring it to you next but first here's a look back at this day in history.

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can you talk about the coca-cola board? we know that the company has been under assault from david winters. >> please. >> what happened. >> he's just another blow hard. >> that was iac chairman and coca-cola board member on the program yesterday. and david winters, the activist investor is firing back but before we get to his new statement let's listen to the rest of diller's comments on all of this. >> what happened is coca-cola had a compensation plan that had been in place for a very long time. they had to renew the plan. the rules said that they had to say that x number of shares

would be given over a four year period right? coca-cola had no intention of giving it over a four year period. over at least 10 and maybe a 20 year period but if you took the four year period and you didn't read underfeethneath it you would have said coke was giving away all it's stuff to its employees and diluting shareholders. it should be been better explained and coke learned a lesson. >> he's saying diller is contradicting what's in the statement. winters says it's troubling that mr. diller who has been on the coke board for 13 years and is a member of its corporate governance committee doesn't understand what it said. >> that's not what he said

because i had another hedge fund manager that said the same thing. barry said it wasn't explained properly and they should have been more clear about that. they should have explained it. where he said he didn't read underneath that i think he meant didn't understand that that didn't mean it was an obligation that you didn't have to hand it out for four years. >> we have reached out to barry diller. >> i had another hedge fund manager that reached out to me. barry said coke didn't communicate it properly. he said that was their mistake. >> there we have it. war of words. intel posting better than expected earnings revenue. raising red flags for investors. chris is a senior analyst and let's talk about some of the red flags. is there a red flag for you or is it all green? >> it was fairly stable relative to what they said back the

november analyst day. if you look at the december quarter, data center came in ahead of what we thought. pc came in a little bit less. the first quarter guidance on the top line was light of where people thought but they maintain what they said at the november analyst day so not a lot of changes against what we heard in november. >> i have not heard you say the word mobile or tablet. where does intel really stand in that world right now? >> well if you go back more than a year ago before the new ceo came in intel had really missed the tablet market entirely. what they had done under the new ceo is to make a push into that market. the problem was the products weren't quite ready yet. so what they have been doing is subsidizing the market for that because it costs more to put an intel chip into a tablet than competing chips. they were successful in the market share this year. the problem is it cost them a

lot of money to do so and the jury is still out whether they have a sustainable business in that market where they have to compete on that. >> were they late not game and given what's happened to apple's market share in the tablet world in that sales on tablets have decreased what does that say long-term about the entire tablet market and where intel fits in it? >> you can make an argument that the tablet market hasn't changed much in the last couple of years in terms of the feature set and such. the ipad air and air 2 isn't that different. that's why we've seen the market plateau a little bit and it was a benefit to the pc market. they went upper forming better and part of that is the fact hah the tablet market plateaued a little bit. >> for ten years literally it traded between the mid teens and 25 right? >> right. >> and weird that microsoft same

chart and suddenly both of them in the last year have broken out, intel got up to 38. microsoft did too. is this new? is this going to continue? is the new floor for intel 30? and will it go higher? >> yeah and i think, you know some of the fears of a very rapid decline on the pc market were in stock a year or two years ago haven't played out yet. one of the real important things for this year people should watch is windows 10. >> are you gambling that windows 10 is going to work given that the last two versions have not hit it out of the ballpark the way people wanted. >> probably kept you worse than window's 8 at this point. it wasn't well conceived by consumers. >> how much of a gamble is intel really on microsoft.

>> with intel's position and tablets now is to be exposed to all the different computing echo systems but in windows they have their biggest advantage. for you to use it that's where they get the premium pricing. it's really important for windows to gain acceptance. >> so what would you say? buy it or not? i still don't know. you're talking in circles. buy it or not. >> i'm a real neutral on the stock at this point. i think you can't be too negative. >> chris we have to leave it there. we appreciate your perspective this morning. >> wait for windows 10. >> also a quick programming note you do not want to miss the intel ceo joining us at 8:40 eastern time. >> coming up waiting for quarterly results from dow

component goldman sachs. dow component. >> i tripped over that before. >> plus those that don't learn from history are doomed to repeat it and a new book out this week on the real cause of the financial crisis is warning that we're about to witness just that. the scary scenario from a major player in washington. that's coming next. you just got a big bump in miles. so this is a great opportunity for an upgrade. sound good? great. because you're not you you're a whole airline... and it's not a ticket you're upgrading it's your entire operations, from domestic to international... which means you need help from a whole team of advisors. from workforce strategies to tech solutions and a thousand other things. so you call pwc. the right people to get the extraordinary done. ♪ ♪

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time but a lot of your best foods and hats are along 6th avenue. we'll bring over a plate of cookies or a casserole at some point but it's nice to have you here. >> he's got some time still, right? he didn't have to bring over the casserole right away. >> no no. but you know what i'm happy for that welcome. >> but that is nice. >> the scarf recommendation is a good one. >> i got a rolex out there. you know those are, in switzerland they're much more expensive. >> hough did you pay for it. >> $10. >> it's unbelievable. >> very nice. >> there's a lot of great things in this city and we are live from new york city and i like the cars going by barry. >> yeah what does barry know about tv. >> yeah. >> he sells stuff on qvc. isn't that what he's famous for? >> the movies. there's a couple of other things

he's done along the way. >> we're wrapping up week two in our new home. getting to know other nbc friends in our neighborhood including brian williams. what we should have done was a look back. i do. i think we should have had barry diller, we should have said this is the first week. >> there's still two hours and 20 minutes left. >> he would have to cut that. >> why don't we cut it end of the month. we have big shows and it gets even bigger as we get back. >> but then it would be a squawk box sort of thing. >> we're global. >> we are. futures at this hour i had no idea they were down 40 before. now they're flat. >> dow's up. >> that's why i said nothing would surprise me with the way the futures are trading and at this point i don't know whether

they trade off crude or whether they trade off the ten year or whether they trade off whether cyprus is considering something with it's. >> we have a new book we'll talk about out this week and it's generating a lot of buzz saying whatever you think happened during the financial crisis is probably wrong. it's called hidden in plain sight and he was on the financial crisis inquiry commission and is now sounding the alarm on why the nightmare of 2008 could happen again. good morning to you. >> good morning. congratulations on the book. let's just walk through the main premise. what is it we all missed in your mind that's so different than the narrative that you think is developed. >> the story that the american people have heard and has been told since the financial crisis is that it was caused by greed and risk taking on wall street. but in fact the numbers show

that it was caused by the u.s. government's housing policy. in 2008 when the financial crisis began more than half of all mortgages in the united states were sub prime or otherwise weak and three quarters of those were on the books of government agencies and that can mean one thing and that is the government created the demand for the mortgages and they caused the financial crisis. >> why are you convinced it's going to happen all over again. >> i'm not convinced itself going to happen again. what the book says is unless we change our housing policies it will in a period of time happen again because the housing policies that created all of these low quality mortgages, risky mortgages is still in force in just the last week the government has done several things that show that they are still following the same policies. >> peter, i've been reading all

of our editorials in the wall street journal all along and have watched in horror as history was totally revised through the prism of a mainstream media sort of way of characterizing it to where it's now just dogma and accept it and i said many times you look at the way we tried to get home ownership up to 70% and you look at the way the government greased the skids for lowering underwriting scandals to help people that probably shouldn't have owned houses in the first place and how ironic it is that dod frank is named after chris dodd and barney frank. barney frank said i'll not worried about fannie and freddie and then chris dodd who was a friend of angelo right? >> i suppose so. that i don't know.

it's not in the book but the fact is -- >> right? got one of the sweetheart deals from country wide. but the question here's what people tell me. b even steve says you're totally wrong about this stuff. he says that fannie and freddie only accounted for a small percentage of the sub prime -- that it was created by the private sector completely. that's why we can hang this all on the private sector. >> that's one of the arguments that's made but what people do not say is fannie and freddie were the biggest buyers of the sub prime loans. up to 30 and 40% for years. this is very important because they created this sub prime market because they were customers for it. and why? what was in the pools that they were buying the pools of more kbaj -- mortgages they were buying complied with the requirements.

>> they didn't create them but they bought them. >> they bought them. >> what do i say? they didn't have to create them? they bought them so they couldn't have been created if there wasn't a secondary market for them. >> the government through fannie and freddie bought these mortgages from wall street. the reason there was such a market is because they were customers for 30 or 40% every year. why did they want the mortgages? because these complied with the affordable housing goals. >> so i want to bring us to where we are now because one of the other pieces going on now is that you don't believe that dodd frank addresses any of the real issues. you think frankly you'd like to roll back or you're not bothered by the things being rolled back. all the sub prime loans and if we want to believe that fannie and freddie were responsible for

carey wrought creating a market like that, whether you look at the consumer protection bureau or other pieces of the legislation that are supposed to avoid people being able to take out some of these mortgages using phony applications and the like. >> as long as the government creates the kind of market it created when 1992 and 2008 when the crash occurs as long as that happens the consumer financial protection agency is not going to protect us. it's not going to protect consumers. even barney frank said it was a big mistake for luring low income people into these mortgages. >> the commission you were on didn't come to this conclusion and had guys on it and others. >> right. >> but they are the enablers of the whole new narrative that still has the banks on their heels as we saw six years later. they're still not making any

money or as much money as they were able to. >> that's right and i descented from the report of that commission. >> all right. we have to run for some reason. >> thank you. >> still to come this morning why elon musk is afraid of the machines. plus jim chanos unveils his investment ideas and intel ceo joins us to talk about the company's earnings and prospects for the future. stick around. squawk box will be right back. the new banking rewards program that rewards our customers, every day. you'll get things like rewards bonuses on credit cards.... extra interest on a savings account... preferred pricing on merrill edge online trades and more... across your banking and investing get used to getting more. that's the power of more rewarding connections that's preferred rewards from bank of america. tdd# 1-800-345-2550 [ male announcer ] your love for trading never stops tdd# 1-800-345-2550 even on the go. tdd# 1-800-345-2550 open a schwab account, and you could earn

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still to come this morning jim chanos is here on set with us. in november he warned that oil was looking at value traps. crude prices have fallen another 36% since then.

we'll get his side after the top of the hour.

becky, joe, and andrew, welcome to new york city. i think you're going to be great for the city. the city's going to be great for she show and each of you. and all i can say is i'm proud

and honored to know you people and see the good work you do. >> wishing us well. nice to see. we've got a little bit of news for you this morning. elon musk is donating $10 million to protect us from artificial intelligence. the research of life institute is working to make sure a.i. benefits humanity. but also warned that it potentially be more dangerous than nukes. you've always worried about the rise of the machine. >> stephen hawking has said the same thing. it is a genre. i have some of the books. it's a science fiction genre. >> have you seen the movie where johnny depp takes over the world. >> and locks them out as he sees it. how they're taking him out of commission. you know, you watch -- it's kind of -- people got sad watching

that as he goes through his childhood almost. >> i'm sorry dave. i'm afraid i can't do that. >> you saw what he did out there? there's one guy still out there turning and turning. he's probably near pluto by now. and they say there's three things. they could be nice to us. they could be ambivalent and not really care one way or another. or they could be hostile says we don't need people deciding what we do. we can do it ourselves. they have to eat, make waste, do all this stuff is that is unnecessary. we're finished with them. >> there's a movie coming out with hugh jackman. have you seen this? it's a cute little robot. >> does he get mean? >> people think he's mean. >> it's very close to chucky. >> it is. jim chanos coming up right after the break. he's our guest host for the morning. we're back in a moment.

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a legendary short seller on the markets. china and the health of the pc. jim chanos is our guest host. we'll ask him how his short on energy companies are looking now. earnings alert. dow component goldman sachs set to report. we'll bring you the numbers and the instant market reaction. and a reality tv star launching a brand of marijuana that supposedly won't give you the munchies. >> get a lot of haagen-dazs ice cream bars. chocolate, got to have chocolate, man. >> the second hour of "squawk box" begins right now. live from new york business

never sleeps, this is "squawk box." >> good morning, again, everybody. welcome back to "squawk box" here on cnbc first in business worldwide. i'm becky quick along with joe kernen and andrew ross sorkin. earnings and data that could move the markets. at 7:30 we're expecting quarterly numbers from goldman sachs. then from 8:30 we get the government's latest inflation numbers. we'll get the consumer price index. remember that came after the ppi yesterday that showed a much bigger decline than had been anticipated. also at 10:00 a.m. latest read on consumer sentiment. and the u.s. equity futures at this hour we've been bouncing once again this morning. an hour ago we were down about 40 point ossen the dow. right now dow indicated down about 7 points. s&p futures down by just about a point. and the nasdaq down close to 20 points. also take a look at currencies. a day after the surprise move by the swiss scrapping the floor between the swiss franc and the

euro that tie that was trying to keep it. it didn't work well. this morning the euro versus the dollar 1.1586. that's something people are paying a lot of attention to. among the stories we're watching today, shrum ber jay is cutting 9,000 jobs. company working on controlling costs as it deals with plunging oil prices. quarterly earnings beating the street by a nickel. also to tell you this morning about this big case in the eu revolving around amazon. the eu outlining its case today against amazon. the e-commerce tax arrangements in luxembourg may violate the eu law and give an illegal advantage over kemcompetitors. also german chancellor angela merkel snubbing vladimir putin. saying there's no chance the

russian president will be invited to the g7 summer in june. she says russia's moves were a violation of common values. >> that's big news. because merkel had been his defender to this point. >> well she wants him probably dpp you see this picture of him there? >> it's the oil. >> it's probably the oil. our guest host this morning, legendary short seller -- looks a lot better than that with his shirt off by the way. jim chanos. and we no longer call him mr. shorty. he has complained. we're not going to do that anymore. >> i never complained but welcome to the neighborhood. >> thank you. >> he's the man behind the enron scandal, did we forget about your first one? baldwin united. the cincinnati company. what was his name morly thompson.

who was the lawyer that represented him too? >> i don't remember. >> anyway i could come up with -- to name a few. more recent le he's made big calls here on "squawk box." china's slowing economy and big threats to big oil. he's the founder and president of the world's largest short selling hedge fund kynik o rks s.s s. it's an interesting story what that name is. obviously it's greek. i can't remember what it was from. >> the -- they were the cynics. the cynics outside of athens. it didn't have the negative connotation as it does in english. >> you have -- for six years you've been like why am i a short seller with the markets. it hasn't been right. i think -- are you looking out at the ocean and seeing a ship headed your way that says your ship is coming in with the way these markets are starting to act? aren't there some -- doesn't this portend some big short

selling opportunities? this weirdness we're seeing? >> when you called us the largest short selling fund and firm. and, you know, that's damning with feign praise. it's tough. it's been tough for five years. and who knows. we're not market timers. we try to do our best with companies and industries. and then every once in awhile pick a shot at something bigger than that. like china. but i mean as we've been saying for about a year now to clients, the rirvegs are certainly rising and have been rises. people come on to justify all kinds of things. we point to where the market was, for example, in the dotcom era and say it can get there. and maybe i'm okay. but comparing markets to all-time euphoric tops as a rationale for investing risk always worries me. >> what about pointing out the inflation adjusted the s&p isn't where it was years ago. same thing. >> that's comparing it to a

blowoff top. why wouldn't you want to compare it to something near bottom? >> if all you want to be is short, why didn't you put all your money in the short euro a year and a half ago? >> because i wasn't smart enough to think of that. we're not currency traders. >> you look at the income statement balance sheet to decide what's happening. >> yeah. hopefully. >> so even to talk about you as a top down or a macro guy, it's certainly better when the whole macro thing is going to hell for you. >> we're stock pickers. and we came across our -- >> stock panders. >> pickers, joe. we came across china because of our work in the mining sector in '09. so it really depends on what we're seeing in the companies out there and that's where we think we hopefully can get an edge. it's really tough to do it to predict markets or currencies. >> although you did tell us that energy was a problem. you've been short energy for how

long now? >> a couple of years. >> a couple of years. we had an interesting analyst who looked at china who called for a decline in oil prices less than a year ago. maybe seven or eight months ago. saw that drop coming and saw it because of the decline in demand in china. why did you think energy was short? >> well basically due to the structure of what happens happening in north america. the fracking and shale revolution was propelling us to be the largest oil producer. and in a way that i thought was uneconomic and still is uneconomic for the drillers. but it was going to be enough supply to really disrupt the markets, more importantly the big oil companies. the exxons world dutches. they're finding their business model challenge because the days of finding easy cheap oil is over. now you have to drill in the middle of the ocean. you have to deal with mr. putin or into the arctic. so on one end of the oil

business, you've had these massive multi-year projects that were really expensive. then on the other hand you had this explosion in supply in relatively cheap energy in north america. and on top of it you just added a ton of debt. because of take your pick. fed policy or whatever. and so that was a witch's brew that i think was really -- we talked i think a little bit before i got on set was sort of surprising that prices stayed up as long as they did. >> it's in the multinational. the ones that may go bankrupt are who? >> this energy spot is a place you have to look at each individual company. each has its own acreage, balance sheet. so you can overlay pricing and your assumptions on pricing but then you have to look at your cash flow statements and where they are. the most problematic are the big national oil companies. >> so it wasn't a call on oil going from 100 to 45.

it was a call on -- >> economics changing. >> but it was a call on the companies. >> and the fact that the shale explosion was on the margin. >> but offsetting that you said it's getting more expensive to do that anyways. you weren't thinking that oil was going under $50. >> i thought the companies were by and large and still think they're uneconomic. >> it wasn't a call on oil going below $50. >> no. the business model has changed. exactly. >> so what happens? you've been short two years. have you doubled down on this? are you trying to reap some of the profits? >> it's interesting because you've seen the national oil companies like where we had a good position really unwind quickly. but yet the publicly traded integrated oil companies, the exxons chevrons they haven't gone down much at all, for example. >> right. a lot of people said these are

buying opportunities. >> i just think people are underestimating how much the cash flow is going to be cut at those companies. what we've seen with large companies, they haven't really guided yet. if you went into the back end or the eagle fort or whatever the drillers have already come clean with their lenders and the credit market and said we've got some issues. we're going to cut. you haven't heard anything from the big guys yet. >> although yesterday the front page of the financial times talked about billions of dollars of projects that were being dropped as a result of the decline. >> they haven't said we're not going to make $7 this year we're going to make $4. that's what hasn't happened yet. >> what do you tell people? you say, you know, if you had been short the entire market you'd be down 40%. but with me you're down only 20%? >> actually that would be a good sale joe. you can always hedge your makt exposure. >> there are people that want to be non-correlated with financial assets and need to use you.

is that enough? will they say i'm happy with what you did because you only lost 10% instead of 30%? >> almost all our clients do with the long side. >> your caterpillar call looks like it's right on the cusp of something happening, doesn't it? >> well caterpillar is a company that -- >> let's pop it on the screen if we can. >> even further. go back two or three years, i guess a two or three-year chart would be the one. there look at that. so if that breaks through, what is your objective on that do you think? >> again, we don't have price objectives on our stocks. i think that the company is in three areas, two of which are highly troubled. one is the construction -- excuse me. the construction industry is not, but the mining and the energy businesses are

increasingly challenged. last year at this time it was just the mining business. and people said well at least energy is going to be positive for them. i think we can take that off the table now too. part of the numbers being way too high. and management not coming to grips with it. i don't think they're going to earn the amount people think they're going to make. >> what about other energy-related companies? now that you see that it's $45 oil or $46 oil, there's stress elsewhere. i mentioned ge a couple times. they went full force into oil. and they're on a low. >> yeah. we're going to sort of figure it out as time goes on. companies come clean and say my gosh we had an energy exposure we didn't think he had. or there's some connection and that will play itself out. i mean it's pretty rare you see a commodity this important to the global economy that suddenly drops 50%. >> although we hear about the positive implications for this.

you think this is going to be a place where you look for your blowups. >> yeah. i think that -- it's going to be interesting. because if you looked at what companies like fedex and dunkin' donuts in the fourth quarter, we're not seeing it yet. we're not seeing the pass through in small purchase ticketing. maybe it's a little bit better. consumers are somewhat rational i think, that they will say this is a windfall but i'm not going to change my permanent spending habits completely. because gas prices might go up. >> although they do buy big cars and trucks. >> we are americans. look. it certainly is a positive. you can't think on balance for our economy. it's a net/net positive. the problem is the unexpected shocks, the credit issues the sort of transfer mechanisms. that i don't think anybody knows yet. >> was ugly implied before americans in that comment you just made? >> ugly americans?

no, not at all, joe. >> all right. so we're allowed to buy those? it's within our right to buy the horrific cars and own guns and things like that? >> absolutely. i'm all for it. big second amendment supporter here. >> good. because i'm watching you. thanks, jim. we'll have much more from you -- >> going to be here for the rest of the show. >> you know what they drive over there too. if there's ever an accident no one is surviving in the little cars they drive over there. >> it's bad news if you hit a truck. >> a guy saying what's that? was that a squirrel? anyway. when we come back stock picks in the tech sector. in the 7:30 half hour we expect results from goldman sachs. and why tesla missed china problems. "squawk box" will be right back. what makes it an suv is what you can get into it.

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welcome back, everybody. the squawk platinum portfolio is online. you can go to cnbc.com to check the pros' picks realtime. paul meeks joins us this morning. thanks for joining us this morning. >> always a pleasure. >> let's talk about your picks. first up apple. some people say that's a tough one to get into based on the momentum one direction or another. why do you like the stock right

now? >> i think in the last couple of months the stock has shown some stability here at this price handle. i also think that the company is very cheaply valued. i calculate -- remember the company is still generating cash flow but right now they have about $20.40 net cash. i put a ten multiple on that stock. that's where we are now. i think the stock should deserve at least a market multiple. what is happening, i believe, that the iphone ramp particularly the big form factor would continue to be very nice. what a lot of people don't realize is this company has had had a problem sustaining its gross margin. i think we'll see stability if not an increase in gross margin. the other thing that's interesting is as we go to the larger form factor we're going to put more and more memory on that. and that's also more profitable to apple and to the component vendors. for these reasons i think if i take apple, i continue to see a strong ramp.

i'm not even thinking about apple watch yet. that's going to be an incremental upside. i get a stock price about $154. stock's now about $106. >> okay. so let's talk about delta. is this a play on oil prices being lower? >> yeah. i've listened to the dialogue this morning. delta is one of the airlines that hedges the commodity. at least somewhat. but even with the hedges this year, they're going to save about $1.7 billion on their costst. if the commodity ends up staying down, they won't hedge up. in the meantime i don't think delta is your father's 1970s 1980s style airline. the company last year had a 20% return on investing capital. and this is even when -- no pun intended -- they had some head winds with overcapacity in asia problems with the economy in europe being in the doldrums. but business in the u.s. is so strong and they've been running

so efficiently that i think this stock over time should not get the very low pe cyclical multiple. but get one like a quality industrial company like a honeywell. >> management premium too. >> yeah. i think richard anderson and his team are tough. >> it's not richard. but he is good. >> very good. one of the things they do is interest. it's been a boom and bust with burning cash. last year they generated $3 billion in free cash flow. and you may not want to hear this if you're a flier, but as a shareholder you do sometimes they buy the latest aircraft from airbus and boeing and sometimes they buy somebody else's aircraft. that's been used. they're very very savvy with capital expenditures. >> but you can check -- you can measure stress. you can see how many miles it has on it.

>> are you worried about that? >> don't tell him that. he's going to switzerland next week. >> can you also buy a refinery? >> i thought it was a great move when they did. >> very controversial. and when oil comes back and jim may think it never does but they typically have an advantage whether they -- >> wait a second. you told us when oil stays low they're going to save $3 billion. >> playing it either way. >> yes. i agree. but if oil comes back you know you do have this refinery that in the past during more normalized times they had about a dime gallon advantage. >> very quickly. warner. you like this because of what's happening with auto sales? >> the problem is almost 50% of its business is europe. of course that's a troubled region. however, regardless of where the commodity goes over time.

borgwarner is in two businesses. drive trains and engines. one of the things they do where there are turbo chargers is over time we have to have because it's mandated by the regulators, better mileage per gallon on vehicles and also lower emissions. and right now the light car fleet, about 35 miles per hour. in about a decade from now you have to get up to about 55. and this will happen. regardless of what happens with oil in the next couple of years. and so this is a company that has a manufacturing advantage, design advantage, components are often sole sourced both on the engine and drive train side. and it's meeting those two themes that are happening. if you like it or not on both increasing the fuel efficiency and improving the -- >> that's it? it's a sexton.

what's the sexton fund? what's that? >> sexton is an article instrument. >> oh, god. okay, fine. did we know that when we booked this guy? >> yes, we did. >> borgwarner, i'm waiting -- >> for the racy stuff. forget it. paul thank you very joining us. >> thanks. >> i like it. i'm long apple. i think it's great. >> now you can go online to cnbc pro on cnbc.com to track the picks realtime and read analysis. platinum portfolio will be back at 8:15 a.m. >> i can't wait to talk tesla with you, chanos. >> we were talking that on the commercial breaks. >> we were. that'll be a tease. >> got some interesting thoughts. >> you do. and we're going to harken back. coming up marijuana that won't give you the munchies. then why smoke it? that's a concept behind a strain

of pot being launched by a reality tv star. i guess if you don't want to get fat. but you've got to admit, that stuff tastes -- i'm told it tastes pretty good. and later, why tesla is struggling in china. we'll get jim chanos to weigh in on that. take a deeeeep breath in... and... exhale... aflac! and a gentle wavelike motion... ahhh-ahhhhhh. liberate your spine... ahhh-ahhhhhh...aflac! and reach, toes blossoming... not that great at yoga. yeah, but when i slipped a disk he paid my claim in just four days. ahh! four days? yep. see why speed matters, at aflac.com.

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okay. when we come back goldman sachs is now set to report in just a couple of minutes. and of course reaction from an analyst. "squawk box" returns in just a moment. financial noise financial noise financial noise

welcome back to "squawk box" this morning. making headlines, new numbers out today say capitalists had the highest total since 2000. i don't know if that means we're getting near a top. also a court is cutting the max amount of money bp has to pay for the gulf of mexico oil disaster by a million dollars. and apple and google will be

paid $415 million to settle a lawsuit by tech workers. employees accuse the firms of conspireing to avoid poaching each other's employees. and you might remember, steve jobs and eric schmidt had those sequence of e-mails that went back and forth. not the most attractive. some unattractive facts, as they say, in those e-mails. a new product from the former real housewife of new york who created the skinny girl line of alcohol. bethenny frankel is now launching marijuana that won't give smokers the munchies. >> how do they know? is it a gmo? >> i want to say this woman is brilliant. she can come up with a skinny girl vodka. then she knows how to -- >> how would you come up with a marijuana that doesn't give you the munchies? >> you have to take something out of the strain right? >> you have tho know what the

hell you were doing which i don't think she does. >> what i imagine happens in one of these instances is there's an investor somewhere who comes up with this idea and she is all right associated with the skinny girl thing. >> i get that. the way -- we've been breeding things for hundreds of years the long way. now we got a short way to do it. but everyone who's politically correct think you're going to die if you use anything genetically modified. >> i changed my opinion on this. part of the problem is they're changing the strains so you can stray a plant with much more pesticide and the plant will survive. but that doesn't tell you what it's doing, the pesticides. that's what concerns me. >> you can create plants that don't need pesticides. >> that's not what they're doing. >> i don't know. i want to be short young brands if this happens. taco bell's in trouble. >> exactly. she's got pot ware.

don't get hungry. music doesn't sound better and you feel exactly like you felt before you smoked it. >> that doesn't help. >> no. all you get is the cancer. >> yeah. let's talk about intel. we've been watching shares of the company this morning. first quarter guidance fell short. the company expects first quarter sales to come in at $13.7 billion. that was only about $80 million below expectations but did put pressure on the stock yesterday. we'll be talking to intel ceo brian krzanich. that's coming up today at 8:40 eastern time. called for the death of the pc. he's been short hp for a long time. you still think in that same mind-set? >> we're still in the same mind-set. we see continued pressure on the pc pakers. you see the rise of companies in china that are now muscling into this area. both on the pc side smartphone side and tablet side. and increasingly there are

companies like hewlett-packard that really resorted to financial engineering to make their forecasts. and we just don't see that changing. >> ibm even more so. ibm's worked out. >> yes. and having said that i mean i agreed with your guest before. i mean we're long apple, for example. because you're getting apple at a lower multiple than hewlett-packard or some of the others and yet it's growing, innovating, throwing off tons of cash. >> they sold everything. >> services company. >> services. i wouldn't put ibm -- we have been short ipm but wouldn't put it in the pc. >> what do you think about intel? >> we're short intel. >> wait a second. you're short intel? is this a new effort? >> i don't tell you all my short positions all the time becky. sorry. we've been short intel probably better part of this year. six months. >> what was the catalyst for

that? >> same idea. i think joe mentioned earlier this morning the stock has been between 15 and 25 forever. and it's got the same challenges. i'm going to be curious to hear what the ceo says about the balance sheet and some other issues we saw on the balance sheet last night. >> one thing that intel has done is kind of decimate the competition. amd used to be a viable competitor and many would say today it's not. >> i think that's right. they've missed mobile by and large. and the problem is the 60% gross margins. in a world increasingly where the chip power is at much lower gross margins. say what you want about amd, but other chip manufacturers are manufacturing at gross margins much less than that. >> and it's weird when you talk about how they get that. it has to do with plans. >> it's a capital intensive business. you see that with them. >> jim goldman's out.

we were looking for 7.6% in revenue. 7.69 is exactly where the revenue number came in. the stock right now -- can't tell where it's going to trade. looks like it's down about a percent. yeah. the revenue number's above. if that is a clean bottom line number that would also be above as well. people look at other things obviously. investment banking revenue, 1.4 billion. equity revenue 1.93. so in the total, $2.17 billion on 7.69. they reduced total assets in the period by $55 billion during 2014. i wonder what that means. because their investment committee thinks we're good in 2015. >> right.

there have been questions, people were wondering just about commodities trading and the trading desk overall. and i'm just looking now to see how they're doing. but there are comments from lloyd blankfein who says they're pleased with it through the year. pick up momentum for the global economy. that will improve the opportunity set for 2015. that stock is trading lower though. >> they made $17 for the year. trading at 176. see, i can quickly figure that out. ten times earnings. have i got that math right jim? >> i think that's pretty much spot on joe. >> you know my favorite topic? compensation benefits. operating expenses have not changed. essentially unchanged in 2013. same on the compensation. the ratio of compensation benefits to net revenue for 2013, 36.8 prths%.

total staff increased 3% in 2014. >> for the fixed income currency commodities, that's the unit i referred to before. that was 29% down from the quarter a year ago. a lot of e the trading desks had trouble with this because interest rates moved the way nobody was expecting. and so that's something that has affected just about all of the big banks with trading operations. >> it says -- i was wondering whether they were squaring their positions. it says the asset reaction was part of a initiative to reduce activities with lower returns. not necessarily to get out of i guess positions that they were worried about. >> well what deal must have happened for net revenues and underwriting, 37% lower. what transaction must have taken place? >> why would you ask me that when you're mr. dealbook? >> i'm just asking. it wouldn't have been an alibaba transaction. >> facebook was the year before.

you're talking about '13? >> there were more ipos in e the past year. >> could be credit underwriting. could be bonds. it's not stocks. >> doesn't necessarily mean stocks. >> all right. >> jim, thank you. we'll have much more with jim chanos through the show. >> what's coming up andrew? china is a crucial market for automakers. phil lebeau will join us to talk about the auto sales market. and we'll get jim's view on that and also his take on tesla when we return in a moment. so what's going on today? news alert! message! email! calendar update! most of us admit to being overwhelmed by information at work. that's why ibm created verse. it uses powerful analytics to uncover hidden patterns in your email, calendars and social feeds. it continuously learns how you work. and helps you prioritize the people and projects you need to focus on. there's a new way to work and it's made with ibm.

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gm's sales growth in china are boosting its profit forecast. meanwhile tesla's china sales were unexpectedly weak. phil lebeau is here to take us in those numbers. >> one other piece of china auto news getting a lot of attention here in the united states is the fact that volvo has said it will be selling in the united states a vehicle that's made in china. remember volvo is now joined by the gili corporation which is a

chinese auto manufacturer. it will sell the s-60 sedan some time later this year in e the united states. volvo calls it an upscale sedan. they believe it will do well here. it is the first china built vehicle to be sold in the u.s. when we talked with the ceo of volvo earlier this woo ekeek, he down played any concerns people might have regarding a vehicle built in china. >> they are made in belgium or luxembourg. but i think that's something our customers don't have to care about. they will deliver exactly the quality our customers expect. >> all right. let's talk about gm. its sales last year in china up 12%. outpacing the market. they sold more than 3.5 million vehicles in that country. by the way, that is 35% of gm's global sales. so in other words were one out of -- more than one out of every

three vehicles that general motors sold in the world last year was in china. it's the number one market for gm and their key to profitability going forward. they're building five plants in china. and speaking of sales in china for a company and how critical they're going to be in the future, take a look at tesla. tesla started selling vehicles in china last year. and the expectation is that tesla will do very well there. because it has a couple of things going in its favor. one, it's a luxury vehicle. that's going to be the number one luxury market. and china is increasingly moving towards wanting auto manufacturers to sell electric vehicles. however, q4 sales declined. they say it's because of customer confusion over recharging. but elon musk says it's a short-term issue. and by the way, when we talked with musk about this in detroit, he pointed out that even though they are going to be weaker than expected in china in the fourth

quarter, they will offset that weakness with stronger sales in u.s. and europe. >> thank you for that and thank you bfor teeing up our next conversation. we're going to turn to jim chanos and get his thoughts on tesla which is less upbeat than the news we just heard. how bad is it? >> first of all, i mean -- >> what's your problem? >> this problem in china was foreshadowed by the fact i believe tesla lost the tent of its china operations earlier in the year 2014. so that may be a glimpse that not all was going swimmingly for them in china. they have a bigger problem and it's not unique to tesla in china. and that is they are a very high end product. i mean the car doesn't have all the rebates that it gets here. and so it's $100,000 plus. this is still the economy where the average per capita income is

about 1/8 of what ours is. >> but you have a larger problem with tesla. >> let me finish that point. the real problem is an awful lot of people who can afford a tesla right now in china have some bigger problems on their hands. that with where did they get the money and who's looking over their shoulder? and the high end market in china right now is very soft. >> we've heard that. >> absolutely. >> all kinds of things that have been under pressure because of the crackdown. >> absolutely. luxury watches, all that. >> your larger argument is it's a story stock and the story doesn't hold. >> here's the problem i have with tesla and a lot of companies like tesla in this market place. and joe can remember back to some of the stories. but here is a company that is valued on the basis of its 20.25 earnings. projections. the ceo and analysts confidently

make, we're going to be making millions of cars in 20-whatever. but can't tell you about the next quarter. >> it was three days ago we had the guy on. remember? and i forgot what year was that? he did 2020. wasn't he doing 2020? so he was on and i said for real, and so you just buy this no matter what. >> we couldn't predict the sales in china. >> right. but i said at 196, he said absolutely. were you saying absolutely buy it at 300? yes. and i don't know for nothing about tesla. all i can tell you after doing this so long when you get -- >> you know as much as everybody else, by the way. >> when you get viewers that if you even -- if your eyebrow twitches when you talk about tesla, they are all over you. the blackberryians again.

the cirrusians. and most of them all go back down. >> well, those stocks that you mentioned -- >> they're not tesla. they don't have a beautiful -- >> what we call story stocks. >> and that is a stretch to compare tesla to. but i'm just saying the response to people if if you say that not all trees grow to the sky, if you imply that. >> i've never been screamed at like that. >> but you make the argument there's nothing proprietary about tesla. >> design assembly is. but keep in mind that the guts of this product is made by panasonic. >> the battery. >> yeah. you buy panasonic any time on the tokyo stock exchange. if you believe the future is electric cars and batteries and joe and i can argue and i happen to agree with him, where's the electricity come from in. >> when you look at apple, they

assembled the guts of their machine. >> but the software is there. >> the applians have stayed long. >> but also the power of tesla is tesla. >> the people -- no it's the battery. it's a battery pack from panasonic. >> but the design and the -- >> fine. yeah. and that's great but it's a manufacturing company. it's an auto company. it's not a change the world company. >> and just to clarify, you are short the company? >> i am a potential purchaser let's leave it at that. >> of the vehicle or the stock? >> the stock. you guys think about that for a second. >> a purchaser means -- >> cover your shorts. >> okay. >> is that what you're saying? >> i'm a potential purchaser of the stock. >> it sounds like he shorted the stock. okay. >> sounds like you are short. >> we're going to consider you short. >> and you might get out. >> okay. >> is that okay?

if we run a headline at the bottom that says breaking news chanos shorts tesla. >> i would say chanos is a potential purchaser. >> there you have it. jim chanos thank you. we're going to continue this conversation after the break. after we figure out how we're going to think of how we're going to headline that one. >> there were some biotech ones too. but the prestechians. when we come back today, we're also going to take a closer look at goldman sachs numbers. we'll break down numbers after this. there's a look at the stock. it is trading down about 1.4%. stick around. "squawk box" will be right back. you want i fix this mess? a mess? i don't think -- what's that? snapshot from progressive. plug it in and you can save on car insurance based on your good driving. you sell to me? no, it's free. you want to try? i try this if you try... not this. okay.

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goldman sachs posting better than expecting fourth quarter earnings. joining us on the line is marty mosby. i hope we can show a chart of goldman to see where it's trading. because if you say goldman beat expectations, years ago that meant that the expectation was 260 and they earned $8. is it beating it by 4 cents actually beating it for goldman? because the stock is down. >> it's still a beat. but when you're looking at it, the revenues came in weaker than expected. that's what the stock is reacting to here. >> the consensus revenue was

smaller because it was in line or basically above wasn't it? >> right. but we were expecting they could still and i think the behind the scenes the markets still thought they could be around $8 billion and what they ended up was down around 7.7. >> like a whit ter revenue number you mean. >> exactly. like while they were being conservative on estimates, the real expectations would come in better than you saw. what we had was investment banking weaker this quarter. it looks like some activity was pulled out with the uncertainty that stemmed towards the end of the year. then when you also look at fixed income they dropped over 40%. which the others dropped around 30%. so they had a weaker fixed income quarter than some of the others. >> what was the biggest miss? >> i'm looking at the street account estimates right now. nothing -- it's like everything missed a little, it looks like. >> it is. but again, the two main things that we would look at as being

weak this particular quarter was the underwriting that you did see with both equity and fixed income dropping off. which in our mind probably is just some deals being pushed into the next quarter. this was a lower quarter versus others. and fixed income was weaker than what you would have seen across the street. >> yeah. i see the ficc was 1.22 which is 1.61 estimate. equities was above the estimate. 1.93 versus 1.69. >> right. so equity execution on the brokers side was better this quarter. that was the one piece that actually came in a little bit stronger. >> so you know oil's at under $50 and the 10-year is under, you know the capitulation low from a couple of months back. and the euro's at 1.15 and europe looks like it's going into a deflationary spiral.

how's the outlook for goldman? >> gold man is a lot less dependent than the other cap banks. when you look at goldman estimates for this year from the original point they were were up 10% sop so when you look at the year, they did see strength coming through their businesses. investment banking in particular was showing positive signs of momentum until this particular fourth quarter. and what you would expect is some of that positive will move over into 2015. and we would then at this price point not think that much of that is priced in. so again, they were one of only two large cap banks that increase their estimates through the year. now going into 2015. >> okay. so it's -- you could see goldman as a u.s. story and the u.s. will still do -- at this point we're still hanging our hat on that for 2015. >> well once all those uncertainties you mentioned begin to kind of level out, banking activities will kick back in. so you'll see a much clearer

picture. >> marty, thank you b. we appreciate your perspective this morning. when we come back tesla stock moving lower after jim chanos' comments. and later we got the ceo of intel on the show. we're back in a moment. push your enterprise and you can move the world. ♪ ♪ but to get from the old way to the new you'll need the right it infrastructure. from a partner who knows how

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at ally bank no branches equals great rates. it's a fact. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda.

news makers come to "squawk." short seller jim chanos gives us his assessment of the markets, stock buybacks, and whether or not the eurozone can survive. chip chat with intel. watching it slide after down beat guidance. the ceo is here to defend in a "squawk box" exclusive. plus oil prices may be good for consumers but terrible for inflation data. we'll get the read on the cpi when the final hour of "squawk box" begins right now. live from the most powerful city in the world, new york, this is "squawk box." welcome back to "squawk box," everyone. this is cnbc first in business worldwide. in studio with us this morning, jim chanos of kynikos

associates. we have a lot to talk about with him. plus who he wants to see in the super bowl. first andrew has some headlines. >> let's tell you what's making news at this hour. goldman sachs earnings just came across the tape. shares at this point, take a look, see what's happening right there. you can see it's up in the market just a bit. >> no it's down. >> is it now down? >> always been down. >> oh, right under there is the red. it was hard for me to see. i thought it was coming back. blankfein saying it sees a continued evidence of a pickup in momentum for the global economy. also intel posting better than expected earnings in revenue. but comes in slightly light. we'll talk to the tech giant at 8:40. you may have questions for him, mr. chanos. >> one or two. >> and the iea saying oil prices may have further to fall and

rebounding not imminent. less than 90 minutes away from the opening bell on wall street. futures right now, the dow was down then briefly up and now it's down 56 points or so. i had to be reminded goldman sachs is in the dow. goldman down $2. marty mosby was talking on why the stock was down. he was mentioning that a lot of the individual metrics were low. and there were whisper numbers for revenues that the company didn't hit. i feel like we're in a macro world off of a sudden. i'm not sure what to think about. it's earnings season and important. at any moment when a swiss bank can come along or paris or something like that it's a world where it seems like there's a lot of things we can't anticipate. last year it was all about buybacks and whether or not it truly benefits investors. the trend seems to be continuing early in 2015.

but this is a 30, 40 -- as long as i've been doing this there's been buybacks. our dominic chu has more. probably depends on the situation, dom. >> it absolutely depends on the situation. let's put up the numbers for you right here. people are still reporting their numbers. this is what we know through the first three quarters of last year. and that 12 months here. so if you go through september 30th of last year when we have full information for and go back 12 months howard silverblatt estimated that s&p 500 companies bought back $550 billion worth of their own stock. that's just in the year ended september 30th 2014. now, if you look at who the biggest repurchasers of stock are in the s&p 500, the names might not be that surprising. let's look at the big ones over here. first of all, exxonmobil in that 12 months ended september 30th last year bought back about $16

billion of its own stock. ibm, we talk about ibm often with regard to its share bought back $17 billion of its own stock. and far and away the buyer of its own stock apple. $50 billion worth of their own shares. and here's the interesting part. if you take a look at what happened with the s&p 500, silverblatt estimates in the first three quarters of last year one out of every five s&p 500 companies bought back at least 4% of their own shares in the open market. giving them at least a 4% tail wind for their earnings per share numbers. back over to you. let's talk more about buybacks with our guest host jim chanos. generally speaking -- >> not a fan. >> you're not a fan. you're not in the warren buffett camp that says buybacks can be a great thing. >> buybacks individually can be a great thing. however, if everybody is doing

it and that is really the case from the numbers we're seeing if you think about it buybacks -- if you're a corporate ceo ofr cfo, you can buyback. if everybody is buying back their stock, they're telling you they're buying the stock market. that's all they're doing. they're hoping to get a return a stock market return. corporate america has returns on capital double that. 15% to 20% pretax. by making the decision on the margin to buy back stock, they're telling you a few things. they're telling you profits are not sustainable at these levels. they're happy to take 9% instead of in another chip plant. >> would you be happier with a special dividend? >> first of all, there's also no free lunch. keep in mind the corporate finance theory if you buy back stock and you goose your earnings because of the interest

rate differential you're also a riskier company, right? you're more levered. you're not as safe with the cash on the balance sheet. and in many cases companies are borrowing like exxon is to do its buybacks. >> when companies are borrowing at these rates, we thought the rates wouldn't last for long but these are historical levels. that has been proven wrong if you look at where it is. >> every situation is different. and apple has so much money and they can't -- >> they can't find -- >> right. and it was $49 billion versus ibm and that's still not -- i would say that's still not too much for apple to be buying back. >> let's look at another example. tech stocks that issue stock or doing buybacks to offset dilution of options. and we can ask our guest later about that. they're buying back a lot of stock, yet the share isn't going

down as much as you would think. >> the most cynical thing is when the pressure for a corporate compensation shifted from cash to performance, a lot of ceos saw the way to do that was to get the stock price higher from slinking the float. that would be not. all they're doing is engineering the price higher. >> but lowers the multiple. but if they put a statement in the proxy statement, the eps is their metric for getting paid. >> like ibm is i would say the opposite of apple. ibm revenues are below where they were four years ago. they're like -- at times when i borrowed money just to keep their earnings going. and you know you're short and others have been short for that reason. >> and i'll tell you what the real travesty is beyond what you just said nap is when you have corporate buybacks and insiders selling into the buyback. and that happens a lot too. >> this is a real heart breaking

stuff for shareholders. they bought more stock back at $80, $40. >> they wish they had their capital. >> let me read you something. this is what warren buffett wrote a in a letter two years ago relating to i be rks m. what should berkshire cheer for during the period they're going to own this company? i won't keep you in suspense. we should wish for ibm's stock price the languish throughout the five years. meaning he's in fact hoping that it languishes so they can buy back the stock at what he believes is going to be lower prices. that not make sense to you? >> you have to ask him. >> when you look at it -- do this then. differentiate to me the difference between what you think is going on at apple and what you think is happening at ibm. >> i think as joe said first of all apple has -- is storing up so much cash it does not have enough opportunities to invest that money. i think that that is not

necessarily the case at a place like exxon or ibm where previous will i in exxon's case the returns on capital are de minimis. they can't find -- >> by any valuation metric that's what we hear again and again. why is apple selling to cheaply based on all these forward assumptions. you can't always be right about whether your stock is cheaper or not. >> but in aggregate they can't be right. and that's the point. in aggregate in effect they're buying the stock market. and if returns on capital in corporate america are 15% to 20%, i'm happen foi take nine. what does that tell us about return on cammal going forward? and that's the real signaling. and by the way their timing is terrible. they're always buying back record amounts generally when the market is high. and they're buying back nothing when the market is low. >> you've seen charles' work he

buys back the buybacks and says it shrinks the market. >> i think it's a concurring indicator. i think it's highest at market peaks and lowest at market bottoms. >> we're going to have more from jim throughout the hour. when we come back the leadership baton being passed at home depot. and later inflation data that could move market. s. an update from the ceo of intel. "squawk box" will be right back.

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we got some news out of home depot. the company announcing the ceo is taking on the role of chairman. the current chair is set to retire on february 2nd. look at shares of home depot on that news. he just became the ceo november 1st. he's also adding the chairman title to his role. >> going to have a frank statue at home depots. >> in the front door of every home depot you walk into.

it's kind of the end of an era. he doesn't look as homey and nice. >> he did manage -- if you look at that stock over his term of being there, it was an unbelievable time. >> i know. the previous guy bought the supply chain. do we have his picture? because he was like howdy, come on in. can i help you with something? i don't know. maybe we don't have it. but he was like the barney five. you got me and i'm barney fife. no that's not it. the one in the orange apron where he's smiling. >> yeah. >> maybe reretired it. i want to get chanos in one of those. but only an apron. >> i know who barney fife is. mayberry. >> he was also ralph farley. >> moving on. oh! no wonder we're just stuck here

in the mud. the squawk platinum portfolio is back. and now you can go online to cnbc pro on cnbc.com and track the portfolio managers' picks in realtime and read their exclusive analysis and their rationale rationale. you brought us three, jason? >> three today. >> how psyched are you? don't give us three average picks or -- are these your best picks? >> we would have included one more which is samsung preferred. >> okay. well, we won't put it on the screen. but whisper it? samsung? >> but preferred. >> it might get taken over by blackberry we found out the other day. do i have that wrong? okay. let's go over these. why do you like it? >> first, what we do is always have a combination of

combination. we're focused a lot on quality. >> i think we started with procter & gamble. >> right. so it's a business where there's streamlining simplifying, they're focusing it on the core. it's an incredible business. you've got a company where they do $80 billion in sales. they dominate their market places from a market share perspective. and the earnings power should be going up as the increased focus yields better business execution. >> okay. -- and they will eventually -- where are they as far as ceo now? have they finally picked anybody yet? >> for ag? >> yeah. i mean i just woundnderwonder. their ond -- old one left and running the va. and they brought lafferty back and he's going to be 70. not that that's old. we both know that's not that old

now. >> we've got rupert murdoch today with fox in his 80s. and mary ellison who's around 70 as well. >> then you've got sumner. >> and we like ceos with experience behind them. >> really? what a concept. what's in ex-? >> next would be fox. they're a neighbor of yours now down the street. we actually own comcast as well. we like the media space. >> that was a fast move. you'll be back. quick pivot. nice. >> but fox is just incredibly well positioned. >> there you go again. >> so moving on -- >> this is great. i love rupert. i love roger. >> what's exceptional about fox now is the last couple years they've been investing heavily for growth. they could double their earnings per share. not many companies have that kind of growth ahead of them. and they have good stable

recurring businesses. a great platform. while that may be a head wind over the long-term it's a huge growth profile. >> do you imagine they will end up trying to make another big acquisition a la time warner? were you bullish if they were to do that day? >> we like to say it's almost all about the price. we thought with price discipline, the deal made sense. it gives you a lot of heft and the combination of the platform does make sense at the right price. we loved that management was disciplined. they killed it. they continued to execute. and along the way they did something really valued which is they moved the satellite businesses. got a pile of cash. did it in a fairly tax efficient way. and that was an asset which was generating nothing on the net income line. >> did you believe there's more consolidation, what do you think fox will end up doing? >> i think fox is going to be disciplined. they've grown the business they have today relatively organically. they've done some tuck ins here

and there, but they're on organic growth story. they have the best platform. >> jason thanks. >> ag is still there but there was a shakeup back in october. one of the fab five left. now there are four internal candidates it seems to succeed him. >> one says chanos you ignorant slut. you are arguing your book. how can fewer shares reduction over the last four months not be predictive of higher prices. companies like ibm be a leverage and underperform over time. but when companies use a portion of free cash flow given the no growth world of today, how is that bad? and he didn't say ignorant slut. i said that. i added that. >> the record just shows again that corporations buy back the most stock at market tops and least at market bottoms. it just tells you that no reflection on current profitability. but it's telling you that

corporate growth which every analyst thinks is going to happen may not be there. and it might be wise but on a signaling basis it tells us that corporate returns are too high. >> but it is a slow growth world as charles points out. you got to do what you got to do occasionally. all right. did you do oracle? >> we did not. >> do you like oracle? >> we do. they're an example of a company where they bought back stock intelligently. >> yeah. okay good. all right, jason. thank you. >> thank you. when we come back this morning, postage prices could be going up again. so buy all the forever stamps you can right now. and later inside intel's numbers. a conversation with the chip maker's ceo. "squawk box" will be right back. next week we're squawking in davos. "squawk box" is live from the world economic forum with the biggest names in business and

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welcome back to "squawk box" this morning. british police announcing they have arrested a man in connection with the cyber attacks that happened on playstation and xbox systems. they suffered outages over the christmas holiday. a group called lizard squad claimed responsibility for that. also the u.s. postal service is now proposing slight increases for mailing letters and postcards. but first class forever stamps will remain in their present 49 cents. rise of $1.15 to $1.20 internationally. postcards would increase by a penny. people still send postcards? the increases are the latest to achieve financial stability. if you send a letter from the united states to switzerland, does the u.s. postal service now have to pay more to the postal service in switzerland to get the letter? because they share a little bit of that -- have to -- you know the cost goes up. >> my phone needs work over there.

>> you're back on davos. >> yeah. last year i didn't pay for something and everything stopped. everything stopped. there was an amount of data you need. >> oh you have to have a certain amount. >> what about the first class forever stamps and how would that work under your scenario? >> they're saying the -- >> isn't there an arbitrage possibility? you know who did that? charles ponzi. he ashrbitraged them after world war i. there's a beer battle brewing in the keystone state. claiming a particular brewing company was banned from donating free beer to the inaugural ball of governor elect tom wolfe who is a democrat. state representative says wolf's transition team was punishing yuengling because they supported the right to work laws. that makes it more difficult for

labor unions. pennsylvania is not a right to work state right now. and they're calling if ar ban of yuengling in that state even though it's headquartered today in pennsylvania. did you see this piece? after a slowdown in right to work adoptions across the country, they apparently a lot of republicans at this point think that the writing was on the wall in this last election. that it's time again for states that have right to work have been performing much better than other states. but we'll see. also we should show you this video. three rhinos are back home after escaping from a safari zoo in israel. the rhinos managed to escape through a side gate after a guard fell asleep. when the animals arrived at the parking lot, they were spotted by passers by who called the police who then alerted the safari.

the zoo manager rushed to the site and drove them back by clapping his hands. they were caught on camera running back to the safari while being chased by the guard who has since been fired. >> rhinos are really dangerous. >> they're dangerous, but hippos are too. >> hippos are the most dangerous animal. >> there was one chasing a boat. but did you see jeb bush and chris christie a couple others going by. coming up intel beating the street. we'll have -- .. why did a panel of 11 automotive experts... ... name the volkswagen golf motor trend's 2015 car of the year? we'll give you four good reasons the all-new volkswagen golf starting at $17,995. there's an award winning golf for everyone. e financial noise financial noise

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welcome back to "squawk box." breaking news. december's read on cpi drops exactly as expected. .4. it is a big drop. but let's pull out things we all use. on food and energy unchanged. we could argue that's a little light. like yesterday many were expecting this component to be up a bit. we were looking for .1. if you're looking year over year, up .8. on core 1.6. absolutely no revisions to last month. so that year over year core rate moves from 1.7% to 1.6% and of course we still have production.

university of michigan treasury international capital flows and a three-day weekend. but maybe one thing is most noted. interest rates around the globe are dropping. people like larry summers running around the globe, probably will be at davos with you guys next week talking about we need more stimulus bigger stimulus. but in the end as we get ready for qe to lower rates in europe as japan's 10-year drips under .25%. yes, under 25 basis points our 10-year just breached 170. i am sure that europe will be completely healed because their bund yield is dropping. back to you. >> i know. we need qe over there. got to get that -- if we can get the 15 basis points it's like you know, seven minute abs. you can't get a decent workout with seven. you need eight minutes. don't you think 15 basis points will do it? >> haven't they got most of the

benefit? most of what occurs in europe is bank loans. not the bonds. >> the euro might help. steve leisman is here with more on the numbers. madame lagarde know you? >> she's known me for awhile. from my musical? what do you mean? >> no no. >> because we're playing tonight. no, i'm just kidding. shameless plug 762. >> she also gave a speech. but she had no idea that was coming from the swiss national bank, right? >> that they were going to let the floor go? no, she had no idea. >> what else would i be talking about? yes. she had no idea? nobody did. that's weird, isn't it? >> you would think they would go on because people would front run it. >> the bank itself i don't think -- it shows the dangers of using exchange rate policy wind of instead of monetary policy. >> but why didn't they say

something this couldn't last forever. give hints we're out there to help everybody figure out. >> becky, put your finger on a currency trading button and i'm a central banker and obviously this can't last forever. buy buy buy buy buy. >> you see a drop of 8% in stocks instead of -- >> but the fed's been saying that the last six months. nobody's hitting that button. >> did it occur to you that because it was pegged at the euro switzerland's currency the franc, how about all the other economies that have the euro that have -- where should their currencies actually be? >> that is the central problem with the euro itself. >> how do they possibly expect it to work? >> well first of all, it was a political concept. it was an idea of doing oh we have all these economic reasons we're going to fold in there. the concept was we have an open economy like in the states here.

you would adjust the difference in it. it hasn't worked. the theory has proven to be non-workable. i want to talk about this. now it gets a little interesting. rick was correct. a little light on the core. what are we watching for here? we're watching for whether or not what's happening in the headline which policy makers are i think correctly ignoring as they did on the upside because they're taking out the volatility. is it affecting the core right now? it's unchanged. we have a 1.6% instead of 1.7% year over year core cpi rate. then we're going to get the pce which is what the fed actually follows. that's probably going to tick down to 1.3% which is what? it's further from the fed's 2% goal. so i think this question of will they act this year should act this year and was my base case. it's not anymore. i'm not ready to make a firm call they don't move this year, but i think delaying it is probably on given what rosengren

said early today. and talking about whether it's on this year. >> okay. all right. well, i just wonder what's next. >> did you get a call from jim? i know we've got to go but do you think the fed moves this year? >> i have no idea. i have no clue. >> you want to bet him? bet him on a dinner or something? >> one quick thing though. steve, maybe you have a thought on this. the swiss move what's switzerland's most important business? >> chocolate. banking. >> banking. and so they were tied to the euro all of a sudden. >> right. >> meanwhile swiss banking has been under scrutiny for other reasons. are they losing deposits by being in the euro? >> that's interesting. >> if i'm a russian depositor in swiss banks, i'm watching my currency go down.

and whereas before the swiss franc was a unique safe hain. >> it was a good day yesterday. if you were in francs with, it was a good day for those guys. >> i don't know. but i'm throwing that out there. i'm just wondering. >> where are you playing at? because i think we have some -- this is what you'll be -- >> no, no. >> this is what you'll be subjected to. >> joe, i'm not going to let it -- ♪ >> that is so -- you did that for paula abdul. >> it was a long time ago, joe. in a galaxy far, far away. >> i wish simon would have heard that. >> we have really good video of me playing.

okay? why do they keep bringing -- i know why they keep bringing that up. >> bullseye was canceled after that. >> joe, remind me not to hire you as my agent. >> let's do the video. at the end. >> thanks. good luck at the concert tonight. when we return intel's ceo on the latest quarterly report and the future of the pc market. check out how investors reacted after the bell to those numbers. "squawk box" is going to be returning in a moment. hi. pete and jon najarian here in new york city outside of the nasdaq, where we bring you live daily market updates. and today, we have a very special free gift for you. so many viewers e-mail us wanting to know our secrets on how we trade options.

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welcome back, everybody. intel beating on both the top and bottom lines. but the guidance came in light of estimates. that put some pressure on the stock in the after-hours trading yesterday. you saw the stock moved down after the closing bell. also raising concerns about the growth of intel's mobile business. joining us now is brian kra san krzanich. were you surprised by the reaction? you beat on the top and bottom line. but down to guidance it was less enthusiastic than the street had been hoping for? >> you know i try not to watch the stock day to day.

strategies play out over a long time. it was right about in line for a seasonal transition from q4 to a q1. and in line with our expectations for 2015 which are, you know mid-single-digit growth projections. >> investors who were disappointed voiced some concerns about the mobile unit b. if i'm an investor in intel, lay out the case for me. why do you think intel will dominate in the mobile space, let's say five years down the road. >> sure. you know the mobile space is becoming more and more important. there's fewer and fewer companies who have modem capabilities. that's becoming a commodity that is rare and important. and so you need to have that. you need to build out your mobile capability in order to really set the pace in that area. so that's part of it. the other thing is that the

customers whether you want to sell pcs or servers, most of them also want a single supply source to go for the mobile products as well. so it's important that we're in the mobile space. you can't be absent from that space and expect also to be in the pc business in the internet of things business and selling that same customer or server as well. you need to have this broad base of products for the customers. >> let's talk about pcs in general. we know that things were a little better than had been anticipated for the pc market last year. that's not saying a whole lot. that just says the sales weren't down as much as anticipated. where do you see pc sales? is this something that stabilizes in 2015? >> yeah. if you look at our forecasts for 2015, one of the things we've been able to do is really transition that the company can grow and that's what we've projected. those mid-single-digit growth rates. with a pc base that's flat. so actually our projection for 2015 is a relatively flat pc

base from a unit perspective. and actually a slight decline as our average selling prices as we continue to see some pressure there. but we're able to grow the company with our data center business, the internet of things, flash memory and all the other products we're in now. we think we can grow. so our projections for the pc a flattish year. anything above that will be growth above our numbers. >> how's the relationship with apple? the stock was under pressure earlier this week on the idea apple might not be using intel chips down the road. have you heard anything to that effect? have you had any discussions with the company? >> i just hear the same rumors. you know, here's my perspective. our relationship with apple is strong and the products are great. apple is always going to be choose the supplier who can provide them the most amount of capability and innovation for them to build on, for them to innovate. they're a company based on innovation. our job is to continue to deliver parts that have that

capability. that are better than our competitors. and then they want to use our parts. so i wake up every morning making sure that you know across the board whether it's apple or any of our customers, we have our provide the most competitive part performance, price, reliability. all of those factors. >> hey. brian, joe kernen. i don't think we spoke. what was your education? just out of curiosity. you have an ee guy or a physicist? or just out of curiosity, what are you? >> my focus is actually from school is physical chemistry. >> beautiful. all right. my question then is i myself am a little bit excited about the successful fabrication of this new electric gate over material. did you see that at the university of texas? >> i saw that article. you know you're probably the first person who said physical chemistry is beautiful.

so thanks. >> you're beautiful. physical chemistry is beautiful. the reason i ask this -- what is that old expression about the laws being greatly exaggerated. but this could extend it how far? people are saying if they are successful in the next phase that this would go another 50 years or something? >> you know the real thing about moore's law is it's an economic law. it's about not only shrinking the transiter by 50%, but you're driving the cost down as well in that discussion. and by doing that that's what's driving the proliferation of the electronic devices we've seen. >> okay. yeah, i just wanted to get the positive side of things in the future. now i have to let chanos in brian. i don't know what he's going to say to you about it. >> well thank you. >> going to hell in a hand basket. >> thank you professor. >> the floor is yours, sir. >> thank you. brian, two quick questions of

the numbers. receivables up 24% year over year versus 6% revenues. and even broader receivables minus payables also up versus revenues. was there a stretch in the quarter? is that okay? is that going to come back down? >> well you know for the guy who just said he was the physical chemistry guy and the technologist, you asked a complex business question. >> no that was jim chanos. >> the short seller. >> yes, we're pretty comfortable. if you look at q4 inventories ended really in line with seasonally where we see slight burn as we go through the fourth quarter. our receivables were up a little bit. that's normal. that's just kind of timing of when things come in. so overall we're very comfortable from where our customers are, where our inventory is across the supply chain. we think things are right in line and played out just as we

would have expect. as you seasonal move through a fourth quarter period where, you know, the consumer's buying and you're moving into q1 again. >> one more follow-up. thinking about your capital spending, you have a $10 billion budget this year. let me think about your depreciation, how you think about that. because one of the concerns about intel's numbers is the depreciation expands at $3 billion is almost $3 billion below your cap x. and given that revenue growth is single digits, is that depreciation understated? do you worry about that? meaning it's almost 50 cents a share. >> sure. so one of the things you have to understand is the capital we deploy has a varied depreciation life. some of the capital will be for buildings and infrastructure has up to you know 20-year depreciation cycles. and then other times when you're

buying equipment for the moore's law for our clean rooms, it may have a four-year or five-year depreciation cycle. so when we project out over time we're very comfortable with where our depreciation is. it does climb a little bit over time, but not excessively. >> brian, i got to -- i'm going to go in a totally different direction on you for a second. because it's sort of a buzzy story going around. at ces you made this commitment to spend $300 million to increase workforce diversity. apparently jesse jackson was sitting in the front row. what do you think the diversity problem is in silicon valley? and the other critique that was going around yesterday, was it apparently intel and a number of other big companies in the valley don't observe what i think we're observing. we're not going to be on the air monday which is martin luther king day. >> sure. let's go back to the diversity and why is it important and what are we doing. so you know we wanted to go

out -- we've been reporting our diversity numbers for ten years. and so we've been working on this problem. and we've made incremental improvement. but just like our moore's law, we go out and say every two years we're going to do moore's law. we don't always know how to do that. we're inventing how to do that. we think the same thing. by making a bold statement that we would be at full representation by 2020, it's going to push us as a company to go drive the innovation and the fixes in place to achieve that goal. the fixes are varied. if you look at our female population, technical females coming into the company, we actually are right in line with what's available. you know we're hiring about 25%. what's happening is they're dropping out, not advancing at the rate we want them to. that's a problem set. with other minorities there are other issues. and as far as martin luther king day, we have typically -- you know, this is an example where we're going to go fix some issues.

we've typically not observed it. we wanted to give employees the most amount of choice. so we actually use floating holidays much more than fixed holidays. and so you know martin luther king day, many days we've allowed people to take as floating days to choose when they take it off, based on their families. i committed to the reverend we'd take a look at 2016 whether we would put martin luther king day as permanent holiday. >> brian, i want to thank you very much. appreciate your coming on today. >> we'll talk more right now, there are nerds in our audience and you know that currently there's something called international technology road map for semiconductors which tells us how far we can go with concern technology on moor's law. we can get out to 2028. >> quantum computing, we need one chip. >> it's other things that use chips but out to 2028 moore's

law we can keep doing that. this latest thing i'm reading how you do it it's amazing. you can find a new frontier. there's nothing stopping you and a lot helping you. technology that's with you always. this is our promise. it's never been better to wander because wherever you go, you'll find us doing everything we can, so you can. e financial noise financial noise financial noise

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welcome back to "squawk box." retail foreign exchange brokers are getting hard after the swiss central bank shocked the world banning its tie from the euro to the swiss franc. in the uk the broker filed ford insolvency and here in the united states fx warns it may be in requirements after sufferinged $225 million. shares plunging in premarket trading. check out other brokers including gain capital, a big loser this morning. >> down to the new york stock exchange. jim cramer joins us now. goldman alumnus. results, in you go in the journal, biggest banks lag behind as economy gains steam. the piece basically says that for whatever reason whether dodd/frank or regulation or whatever it is that banks just aren't participating in what is a better economy for a lot of

companies. do we cry a river or is it their own fault? >> that's pretty true. i was surprised at the lack of leverage of upside for bank of america, citi not oriented but not great. jpmorgan will tell you, we had quarter of a lifetime but i didn't see great growth. wells fargo which everyone slammed initially you circle back wells doesn't have legal, bells has -- wells has good lending. wells will do well. and so i felt that that was the only one that really had decent growth. this morning we have suntrust growth looks very good there. but it may not matter because this group is regarded as being a commodity and commodity they're hawking is treasuries and might as well be all one big vanilla box. so no one's going to look at this group until rates go higher. >> all right. we had jamie the other day, jamie dimon, and i -- "huffington post," my god, i don't know like he said something about mom and apple pie.

i got inundated with -- anyway thanks, jim. >> absolutely. say hi to jim. >> up next long and short of it with our guest host jim chanos. "squawk box" will be back. next week squawking in davos. live from the world economic forum with the biggest names in business and politics. the lineup includes -- blackrock's larry fink goldman sachs's lloyd blankfein, at&t's randall stevenson, ceos from aetna, dow chemical novartis and a lot more. "squawk box" live from the world economic forum in davos. profit from it.

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playing the long and short of it with guest host jim chanos. rapid fire. packers to the super bowl. >> go, pack go long eurozone. >> hedged. >> bill ackman? >> long. >> favorite new york restaurant? not long or short. >> going to get me in trouble. michael white's restaurant. >> apple watch? >> short. >> and best power breakfast in new york? >> cnbc.

>> oh. >> perfect answer. >> thank you for being here. that was fun. >> jim, thank you for everything today. a pleasure seeing you. >> thanks. that does it for us today. folks, next week we'll in be davos, starting tuesday. join us then. right now it's time for "squawk on the street." ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer david faber at new york stock exchange. bulls continue to take incoming fire this morning as goldman and intel bring disappointment to earnings season. currency brokers feeling the first shockwaves of yesterday. dow's down 10 of past 13 sessions. oil higher after the biggest downside reverse fll years, 10% intraday move. and ten-year yield, 1.75 consumer prices for december biggest drop in six years. road map